New building tax 'will kill growth' in Devon and Cornwall

Developers could be put off investing in the Westcountry and affordable housing provision could be reduced if a new "development tax" is set too high.

The Community Infrastructure Levy (CIL) is being introduced by local authorities as a means of securing additional income from developers, which can then fund local infrastructure such as roads and schools.

Councils can set their own level of contribution for different types of development with the idea that they can make it more attractive to build schemes in some areas and gain greater contributions from schemes in more popular areas.

Cornwall Council has just begun a six-week consultation about its CIL, which sees housing developments in large areas of the county, including around Truro, Falmouth, Padstow, Newquay and Lostwithiel, charged at £100 per square metre.

The same rate for residential development has been put forward in Torbay, with a rate of £30 proposed in Plymouth and £80 in Exeter.

Justin Dodge, managing partner of Truro-based CSA Architects, warned that if this higher level came into effect it could have dire consequences for Cornwall's construction sector.

He said the new tax would make it "totally unviable" to build affordable housing in the county.

"My worry is that if this is adopted you might as well say 'would the last person left turn off the lights'.

"Residential development is the main sector for our industry, not just architects and estate agents but for planning consultants, builders and sub contractors," he said.

"This will affect the general public and anyone who is employed by, or has anything to do with, the construction industry. I've been speaking to developers and land owners and affordable housing providers and they're struggling to make schemes viable with the current challenges.

"Developers I'm speaking to are saying that they won't invest in Cornwall – they will go elsewhere where there is a more realistic level of CIL. That worries me greatly."

Property lawyer Cameron Caverhill, who works out of the Exeter office of Kitsons, said: "It is causing concern both in the development and construction industries.

"There are three particular concerns – firstly, the impact on the availability of land because if the CIL is set at too high a rate, in the medium and long term it will depress land values.

"Secondly, there is an impact on affordable housing where land has already been acquired or is under development – developers will argue that it is not viable to provide a CIL at that rate.

"Thirdly, if the CIL is set too high it will push development on to greenfield land because that is cheaper to build on."

Although the CIL does not apply to solely affordable housing schemes, many developers provide a mixture of affordable and open-market homes, effectively subsidising the former with the latter. But there are concerns that if costs rise, the level of affordable housing will fall because it will become unviable.

John Schuttkacker, director of developer Westcountry Land, said: "Ironically, areas with the most need tend to be high-value areas because market housing is more expensive so they are going to be areas that are going to be hit hardest by the CIL because it's going to make it hard to provide affordable housing."

Mr Dodge called for housing charges in Cornwall to be set at three tiers of £30, £15 and £5, with scope to increase charges when the economy picks up.

A spokesman for Cornwall Council said: "The CIL is based upon an assessment of viability with £100 per sq m being proposed only for those areas with the stronger housing markets, such as Rock, with a level of £40 for most of Cornwall and zero for communities such as Camborne Pool and Redruth and Liskeard. Importantly, there is no charge for affordable housing anywhere in Cornwall.

"The aim of the consultation on proposed levels is to enable the council to seek views on the appropriate level to ensure that while the CIL contributes to the infrastructure requirements stemming from development, it does not act to unreasonably prevent development."

Although each authority can set its own level of CIL charges, these need to be ratified by an examiner. Mid Devon District Council has been ordered to reduce its proposed level of charging for housing from £90 to £40. Examiner David Hogger reported: "There is a serious risk to affordable housing provision and thus the overall development of the area."

13 comments

@ Trogg "NO MORE BUILDING, there are enough empty houses about for people as it is, but NO_ONE can afford them."
This is the problem. House prices are artificial. If there are empty houses because no one can afford to buy them, then why are the prices so high. A house is only worth what someone is prepared to pay for it. If there are empty houses with no buyers then those houses are worth nothing. And since when have you ever seen a long standing empty property advertised as 'Free to a good owner'?

Ultimately, this CIL is central govenment policy with the amounts set by local authorities - I guess that makes it part of 'localism'. These decisions are made by the politicians voted in at the last elections.
The answer is simple, if you don't like it, vote for someone else ;-)
One upside is that some local communities will finally start getting the infrastructure upgrades they so desperately need following large increases in housing, upgrades that neither central nor local government will fund.

Agreed Jim - Stockhausen syndrome by any other name, excepting of course the usual caveats over DMs reporting of anything to do with "research" involving "facts".
I just like posting it to remind DM readers what DM really thinks of them.
By the way - quite a balanced piece in the Telegraph (!) the other day.
http://tinyurl.com/cw87lv8
The point being that hysteria and moral grandstanding on either side of the very polarised debate about welfare gets us nowhere - except maybe deeper into our trenches.

The_Nipper
Thought you were heading into a Pink Floyd number for a moment.
The starting point for the DM is that their readers aren't the brightest buttons.
You'll probaby also notice that they have been on a long-term crusade to blame all the ills of the nation on 2 groups, the public sector and anyone who claims benefits. There is a little lesson from history that shows how dangerous that is.
The irony is that a fair percentage of their disciples fall into the second category.

ayrunited
Nothing wrong with having an informed view - and the comment was not "to the right of mine" (after all, Thatcher (borderline fascist) expanded the public sector) it was irrelevant, ill-informed nonsense promoted by certain parts of the press. Some of us understand how these things work.
Politicians (that you all vote for) may destroy an industry as may unions or management, recently it has been the banks and members of the public who borrow more than they can afford.
What you all forget is that developments have ALWAYS been taxed to improve local infrastructure, this is just a new way 'forward.

Jim, everytime someone gives a view that is slightly to the right of yours you label them as 'Daily Mail Readers'. The left really need to grow up. Constant name calling may be fine for Ed Balls and simple brother Milliband but the rest of this country find it a little juvenile.

Bullocks
The money from CIL is rinfenced for infrastructure projects and CANNOT be used for anything else.
At least you've caught up, this has only been coming for 3 years now, so you can go back to the celeb pages of the Daily Mail

Another industry being destroyed by the public sector. The idea has merit but only of the money raised is put to good use. We all know that the bulk will get swallowed by the over staffed, over paid, over pensioned, over coddled local authority 'staff'. Sack the majority and there will be less need to bleed everyone dry.

Trogg is right, we shouldn't be building more houses. We should be cutting the population of this hugely overpopulated country. We moan about global warming and carbon in the atmosphere and then conveniently forget that the biggest producer of CO2 is us, everytime we breath. If councils didn't find it so financially beneficial to increase the local population we wouldn't be entertaining drug addicts from Glasgow and Liverpool at the tax payers expense,